International affairs > 11. Federal and States' Export Promotion

Because federal and state export promotion efforts overlap, the Department of Commerce should take steps to enhance collaboration among them to promote economic development while ensuring the most efficient use of limited federal resources.

Why This Area Is Important

Given the importance of U.S. exports in supporting economic growth, in 2010, the President announced the National Export Initiative (NEI) doubling U.S. exports in the next 5 years.[1] The Office of Management and Budget (OMB) subsequently identified this goal as 1 of 14 interim crosscutting priority goals under the GPRA Modernization Act.[2] The NEI identifies increased coordination among the federal government and their nonfederal partners as a priority and a tool for increasing exports.[3] Congress called for such coordination more than two decades ago in the Export Enhancement Act of 1992, which directed the President to establish the interagency Trade Promotion Coordinating Committee (TPCC) to coordinate U.S. government export promotion and export financing activities and develop a U.S. government-wide strategicplan for carrying out such federal programs.[4] This law also called for the TPCC, chaired by the Secretary of Commerce, to review efforts by the states to promote U.S. exports and propose ways to develop cooperation between federal and state efforts.[5]

Many federal and state agencies operate a wide variety of programs across the country and overseas that are intended, at least in part, to assist U.S. companies in entering foreign markets, or in expanding their existing presence in markets abroad. Export promotion activities include efforts to raise awareness about exporting and to provide businesses with export counseling, training, and information on market opportunities; help connecting with potential buyers abroad; and help obtaining financing. Responsibility for federal export promotion is widely dispersed. Some of the 20 TPCC member agencies directly assist small businessesto export overseas, including the Department of Commerce (Commerce) and Small Business Administration (SBA), whose activities are similar to those of state governments.[6]

The TPCC Secretariat is housed in Commerce’s International Trade Administration (ITA) and takes the lead in coordinating the activities of federal export promotion activities and implementing the NEI through an annual National Export Strategy. In fiscal year 2013, Commerce’s ITA dedicated $267.5 million (59 percent) of its total budget to export promotion. The ITA also manages the U.S. Commercial Service (CS) as part of its Global Markets unit. In most states, CS is the primary government entity providing federal export promotion services to nonagricultural businesses through CS’s network of domestic and international trade professionals.[7] While CS’s mission identifies small businesses as a particular focus of its export promotion efforts, CS assists companies of all sizes. SBA’s key roles in export promotion are to conduct outreach and provide training, counseling, and export financing for small businesses. SBA’s Office of International Trade, which provides export financing and promotion services to small businesses, had fiscal year 2013 total program costs of approximately $9.8 million.[8] (See table 7 in appendix V.) The total amount of money spent on federal export promotion is unclear because comparable budget information for federal agencies involved in export promotion is not readily available.[9]

Every state government conducts some export promotion activities, though they vary in size and scope. For example, the five state trade offices GAO visited for its May 2014 report had budgets for export promotion that ranged from $1.9 million to over $5 million annually for fiscal year 2013. According to a 2013 survey administered by the State International Development Organizations (SIDO)[10], of the 14 states that responded 90 percent had budgets ranging from $420,000 to $1.75 million. State-level trade functions can be housed in various state government entities, including governors’ offices, state departments of commerce, and state departments of economic development.[11]State trade offices often have both domestic and international staff; while domestic staff generally are state employees, international staff may be state employees or contractors.

[1]The President launched the National Export Initiative in his January 2010 State of the Union Address. Subsequently, in Executive Order 13534 (Mar. 11, 2010), the President established a new body, the Export Promotion Cabinet, to develop and coordinate the implementation of the NEI. 75 Fed. Reg. 12433. The Export Promotion Cabinet is coordinated by a White House official, has most of the same member agencies as the Trade Promotion Coordinating Committee (TPCC), and is to coordinate its efforts with the TPCC. For a list of TPCC member agencies, see http://export.gov/advocacy/eg_main_022762.asp.

[2]The GPRA Modernization Act calls upon OMB to develop long-term, outcome-oriented goals for a limited number of crosscutting policy areas and to provide information on how they will be achieved. Parts of the act did not come into effect until the fiscal year 2015 budget was issued, but the act required OMB to develop interim goals starting with the 2013 budget. Pub. L. No. 111-352, 124 Stat. 3866 (2011) (amending the Government Performance and Results Act of 1993, Pub. L. No. 103-62, 107 Stat. 285 (1993)). For information on each of the interim crosscutting priority goals provided in the President’s budget, see GAO, Managing for Results: GAO’s Work Related to the Interim Crosscutting Priority Goals under the GPRA Modernization Act, GAO‑12‑620R (Washington, D.C.: May 31, 2012).

[3]In September 2010, the Export Promotion Cabinet issued the Report to the President on the National Export Initiative, which is its plan for doubling U.S. exports in 5 years. All further references to the NEI in this report section include the Export Promotion Cabinet and its activities.

[6]Throughout this report, GAO uses the term “small businesses” in keeping with SBA’s definition of a small business as an enterprise that is independently owned and operated, organized for profit, and not dominant in its field. SBA’s definition of a small business also sets industry-specific standards for other factors, including maximum number of employees and annual revenue, to identify how large a company may be and still qualify for SBA assistance.

[8]Additionally, according to the Congressional Research Service, SBA’s export-related loans amounted to approximately $1.2 billion in fiscal year 2013. Congressional Research Service, Small Business Administration Trade and Export Promotion Programs, R43155 (Washington, D.C.: Jan. 22, 2014).

[10] SIDO is a nonprofit, nonpartisan organization, affiliated with The Council of State Governments (CSG), and is comprised of international economic development practitioners and professionals from state and related organizations across the country. SIDO provides state trade promotion professionals with a forum for collaboration and sharing best practices as well as advocates for states’ international trade development issues so that U.S. companies remain globally competitive.

[11]In this report section, GAO refers to all state government entities providing export promotion as “state trade offices.”

What GAO Found

Commerce and SBA provide some of the same types of export promotion services, such as outreach, counseling, and training, and trade leads, as most states do through their state trade offices. Like the state trade offices in the five states GAO visited, most of the 28 state trade offices that responded to SIDO survey also provide export promotion outreach, counseling and training, and trade leads. While not all states provide all services, the survey results showed that state trade offices provide a range of export promotion services.

In addition to providing similar services, the federal agencies—including Commerce and SBA— offering export promotion services at the state level and most state trade offices primarily serve small businesses. According to Commerce, the majority of its customers are small businesses, although firms of any size may request its services. SBA, by law, offers services exclusively to small businesses. In 2012, 97 percent of the over 301,000 identified U.S. exporters were small and medium-sized businesses.[1] In the 2013 SIDO survey, of the 22 state trade offices that responded to one question, most reported that small businesses were their primary clients.[2] Four of the five state trade offices that GAO visited said they work primarily with small businesses, although three said they also serve some larger companies.

Overlapping export promotion efforts can have both positive and negative effects. For example, officials at both U.S. Export Assistance Centers (USEAC)and state trade offices that GAO visited said that they are operating at capacity in terms of resources to meet the demand for their export promotion services.[3] Consequently, officials at two USEACs and two state trade offices that GAO visited viewed the provision of similar services by different organizations as positive for beneficiaries of these services because the overlap meant that more resources were available to companies looking for help exporting.[4]

However, as GAO previously concluded, without enhanced collaboration, overlap may have a negative effect in that limited resources may not be used in the most effective and efficient manner.[5] For example, GAO has reported that while SBA and the Export-Import Bank of the United States (Ex-Im)[6] offer similar financial products for small businesses, many lenders prefer to work with only one agency and very few lenders use both agencies’ products. Thus, clients may only be able to access one agency’s products through their regular bank.[7] Furthermore, small business beneficiaries of export promotion services could be confused about how to access available services and unclear about who could best meet their needs. GAO found that the extent of collaboration between federal and state trade offices in the five states it visited ranged from no collaboration in one state, to very little collaboration in another, to close collaboration between federal and state export promotion providers in three states.

According to federal and state officials with whom GAO spoke, factors affecting their level of collaboration included physical proximity, level of communication, and resource levels. In addition, state offices report to their own executive and legislative bodies, and state trade offices determine their own priorities and are not obligated to collaborate with federal agencies. States that do choose to collaborate with federal partners in trade promotion primarily interact with Commerce but also collaborate with SBA, both to varying degrees.

The TPCC has three initiatives designed to advance federal-state collaboration in promoting U.S. exports by strengthening and expanding networks of state and local governments and other partners—Export Outreach Teams, Global Cities Exchange, and a Commerce-SIDO agreement—as shown in the figure below.

GAO found that results of these efforts have been limited, however, in part because their implementation has not consistently followed key collaboration practices.In prior work, GAO found that collaboration is generally enhanced by following key practices, such as articulating common outcomes; agreeing on roles and responsibilities; monitoring, evaluating, and reporting on results; and coordinating resource planning. In the five states visited, GAO found weaknesses in the implementation of Export Outreach Teams. For example, in some cases, activities were missing key participants and were inconsistent with the activities’ objectives, in part because SBA was not fully monitoring implementation of the teams across its 68 district offices. Similarly, GAO found that TPCC’s involvement in the Brookings Institution’s Global Cities Exchange initiative to engage metropolitan areas in export promotion had unknown implications for federal export promotion efforts and resources because Commerce lacked a means to monitor the initiative’s results.[8] Finally, an agreement between Commerce (the TPCC Chair) and SIDO expired without achieving its collaboration objective or enhancing client information sharing so states could share credit with Commerce for helping companies make export sales. According to Commerce, by law, it cannot release its clients’ confidential commercial information, and its policy is to make determinations on releasing information case by case, but it does not provide formal guidance to staff on what information sharing is allowable.

When federal and state governments provide overlapping export promotion services to similar clients, one result can be that more resources are available to companies looking for help exporting. However, given the current environment of constrained government resources, without effective collaboration, overlapping export promotion programs may not operate as efficiently and effectively as possible. The three TPCC initiatives have demonstrated that opportunities exist to enhance federal-state collaboration, including improving local networks of export promotion service providers, expanding activities to better include metropolitan area economic development agencies, and working with national organizations representing state and local governments. Renewed effort by the TPCC agencies to implement these initiatives with greater attention to key collaboration practices can help improve the support available to small businesses that take advantage of similar federal and state export promotion services, and thereby bolster federal and state efforts to achieve national export goals.

[2]Twenty-eight states responded to the 2013 SIDO survey; however, not all states provided a response to all survey questions.

[3]USEACs are the more than 100 domestic offices where Commerce’s CS operates, including where SBA, the Export-Import Bank, and sometimes state trade offices have staff colocated with Commerce’s staff. USEACs were established to act as “one-stop shops” that would provide coordinated guidance on export promotion services and available financing. SBA’s field staff—Export Finance Specialists—are colocated with Commerce in 19 USEACs throughout the United States.

[4]GAO previously reported that Commerce and the majority of states provide many of the same types of export promotion services, but that some states have limited budgets and staff. Partly as a result of this limited capacity, most states reported that Commerce’s services are important to their export promotion capabilities and have partnered with Commerce’s offices. See GAO, Export Promotion: Commerce Needs Better Information to Evaluate Its Fee-Based Programs and Customers, GAO‑09‑144 (Washington, D.C.: Mar. 4, 2009).

[6]The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank’s mission is to assist in financing the export of U.S. goods and services to international markets.

[8]The Brookings Institution is nonprofit public policy organization based in Washington, D.C.

Actions Needed

To improve federal-state collaboration in providing export promotion services in accordance with the National Export Initiative and the Export Enhancement Act of 1992, in May 2014 GAO recommended that the Secretary of Commerce, as Chair of the TPCC, take the following three actions:

Improve implementation of the Export Outreach Teams to better achieve their intended outcomes. This could include taking steps, including better monitoring, to ensure that key local participants are invited, that meetings are held as expected, and that the Export Outreach Teams seek to both increase awareness of available export resources and enhance interagency and intergovernmental collaboration.

Take steps consistent with key practices for collaboration to enhance TPCC agencies’ partnering on export promotion with nonfederal entities, such as SIDO and Global Cities. This could include reassessing and strengthening the TPCC’s intergovernmental partnerships by clarifying expected outcomes, defining roles and responsibilities, monitoring results, and planning resource needs.

Take steps consistent with key practices to enhance, where possible, federal information sharing with state trade offices on Commerce’s export promotion activities. This could include more formal guidance to Commerce staff on the circumstances, in light of legal restrictions, in which information can be shared with state trade offices and other nonfederal entities, and exploring ways for clients to give permission to release information useful to such nonfederal entities.

While no data are available to quantify the financial benefit of improved federal-state collaboration on export promotion, over half of Commerce’s total ITA fiscal year 2013 budget of $452.3 million was devoted to export promotion.

How GAO Conducted Its Work

The information contained in this analysis is based on findings in GAO’s May 2014 report listed in the related GAO products section. To determine the main characteristics of federal and state export promotion efforts, including their collaboration, GAO compared their services, types of clients, and performance measures using information collected from documents and interviews from CS, SBA, and state trade offices in five states (Florida, Minnesota, Oregon, Pennsylvania, and Virginia). GAO chose these states based upon the following criteria: presence of relevant Commerce and SBA officials; participation in export promotion initiatives GAO was evaluating; state trade office presence overseas; extent of state-level export promotion activities according to Commerce officials in Washington, D.C.; and state trade office staff size (mix of large and small). GAO chose these five locations to better understand and test federal initiatives to advance collaboration with state trade offices at the local level. This allowed GAO to assess federal implementation efforts overall, but these five locations are not representative of the situations in each of the individual 50 states.

GAO also analyzed data collected by the State International Development Organizations (SIDO) in its annual member surveys for 2012 and 2013.[1] GAO also determined the extent to which CS and state trade offices share operational costs and clients. GAO gained additional insights into how CS and state trade offices work together in providing their services by examining 2012 data in Commerce’s Client Tracking System.[2]

Table 7 in appendix V lists the programs GAO identified that might have similar or overlapping objectives, provide similar services, or be fragmented across government missions. Overlap and fragmentation might not necessarily lead to actual duplication, and some degree of overlap and duplication may be justified.

[1]To assess the reliability of the survey data from the SIDO, GAO interviewed the SIDO representatives responsible for developing and implementing the survey, performed a formal review of the survey questionnaire for methodological quality, and performed data testing. GAO determined that some of the survey data were reliable for the purposes of this report.

[2]On the basis of interviews with knowledgeable agency officials and GAO’s assessment of the data for missing data, outliers, and obvious errors, we concluded that all data elements we assessed in the export successes data provided to us by Commerce were sufficiently reliable for the purposes of this report.

Agency Comments & GAO Contact

In commenting on the May 2014 report on which this analysis is based, Commerce concurred with GAO’s overall assessment that collaboration can be enhanced through strategic management. On August 8, 2014, Commerce provided an action plan in response to GAO’s recommendations. However, it is not clear the agency’s plans will address GAO’s findings. For example, Commerce and SBA determined that Export Outreach Teams would be more effective with a narrower focus on conducting outreach events with businesses rather than internal planning events with partners. GAO believes that narrowing the focus would address only one of the program’s two objectives—increasing awareness of available export resources. This approach would not address the second objective—enhancing interagency and intergovernmental collaboration. Examples of Export Outreach Team activities that address the second objective include sharing best practices for client services, and developing referral protocols that include information about federal, state, and local agency responsibilities and the circumstances under which a business would be referred from one agency to another. With regard to information sharing, Commerce decided that maintaining a case-by-case approach is preferable to issuing more formal guidance because officials believe that issuing formal guidance could be counterproductive and result in its USEAC officials adopting a more conservative stance than they might otherwise. Commerce believes a case-by-case approach will allow it to continue to assess what flexibility exists in each instance to share information. As Commerce builds out a new Customer Relationship Management (CRM) system, it will explore the feasibility of adding a check box for customers to indicate whether Commerce can share their information with key nonfederal partners. GAO will continue to monitor Commerce activities related to its three recommendations.

GAO provided a draft report section to Commerce and SBA for review and comment. Commerce and SBA provided technical comments, some of which reiterated comments made about our 2014 report, and in response we made changes to this report when appropriate.

For additional information about this area, contact Kimberly Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov.